Sim Plify, Do You Have An Opinion on HVCC and Real Estate from A-Z

Sim Plify

You may have attended one of the many GFE/HUD-1 Classes that I have presented throughout the state and heard me talk about a cute and crafty sign in my sister’s house that says, “Sim plify” (SIM Pliffy). When asked about what that meant, she stated “Well, only I could expand (increase) “simplify””. I, of course, disagree. The government does a DARN GOOD job of it themselves.

In an additional effort to simplify the already confused topic of the new “Good Faith Estimate” HUD has once again expanded the guidance to lenders of how to comply with RESPA by releasing their April 2, 2010 revision to their FAQ’s making the grand total 62 pages…so far. Can you say, “Con Fusion?”The topic of Preapprovals and Preapproval Worksheets were one of the biggest changes. A warning for the faint of heart, the language used in the following paragraph many be confusing, perplexing, baffling and downright bewildering. Below is the additional guidance issued in the HUD FAQ’s.

"The following…address preapprovals. For the purposes of these questions, a preapproval is a document issued by a lender stating that a consumer qualifies for a specific loan amount. A preapproval is intended to assist a consumer who is shopping for a house by enabling the consumer to enter into a purchase contract that does not contain a financing contingency." (What???...Sorry, I digress)

"A preapproval is never to be used as a substitute for a GFE. If an applicant has chosen a property to purchase and the loan originator is willing to qualify the applicant for a specific loan amount, then a loan originator should issue the applicant a GFE that facilitates shopping for a loan, not just a preapproval used to shop for a property. For example, a lender may never issue only a preapproval to an applicant seeking to refinance his or her loan; the lender must also issue a GFE."

33) Q: Can a loan originator provide a GFE without a property address?

A: Yes, a loan originator can determine that a property address is not one of the required pieces of information that the loan originator needs in order to issue a GFE. It is important to note that a loan originator must consistently apply its policy on the information it deems necessary to issue a GFE, and the RESPA rule requires a loan originator to issue a GFE whenever it receives information sufficient to complete an application for a GFE. As a result, if a loan originator received an application for a preapproval and that application included all of the pieces of information that the loan originator requires to issue a GFE, the loan originator must issue a GFE and all of the rules that govern the GFE process would apply. In addition, if a GFE is issued without a property address, the future receipt of the property address is not a changed circumstance that would allow the loan originator to issue a revised GFE.

WAIT A MINUTE!!! So now doesn’t that directly contradict the previous FAQ’s numbers 4, 23 and 24?

4) Q: When does a loan originator have to issue a GFE?

A: A loan originator must issue a GFE no later than 3 business days after the loan originator receives an application or information sufficient to complete an application. Application is defined as the submission of a borrower‘s financial information in anticipation of a credit decision relating to a federally related mortgage loan, which shall include the following: (1) borrower‘s name, (2) borrower‘s monthly income; (3) borrower‘s social security number to obtain a credit report; (4) property address; (5) estimate of value of the property; (6) loan amount and (7) any other information deemed necessary by the loan originator.

23) Q: May a loan originator issue a GFE if the loan originator has not received one of the six pieces of information included in the definition of an application (borrower‘s name, borrower‘s monthly income, borrower‘s social security number, property address, estimate of the value of the property and mortgage loan amount sought)?

A: An application includes information the loan originator requires the borrower to submit in anticipation of a credit decision. If a loan originator issues a GFE, the loan originator is presumed to have received all six pieces of information.

24) Q: Are loan originators permitted to process a loan without all six pieces of information included in the definition of an application?

A: Yes. Loan originators may process a loan after they have issued a GFE and the borrower has received the GFE and has decided to proceed with the loan. It is presumed that, prior to issuing a GFE, a loan originator has received all six pieces of information.

So you are probably as clear on this additional guidance as lenders have been. You may, however, hear lenders say that they can issue GFEs now without a property address. Per HUD, this has to be the Lender’s standard of practice and the costs cannot change purely based upon an identified address. I would not expect lenders to jump on this bandwagon with such clear contradiction in guidance. You should still be wary if loan officers are
issuing LSRs stating that there has been a GFE issued without a contract in place.

Do You Think HVCC has Impacted the Real Estate Recovery?

Do you have an opinion about HVCC? Good or Bad? I want to know. I have been asked to sit on an Ad Hoc Committee to determine a position, for or against the continuation of HVCC. I want to hear from you, those who are in the trenches every day, as to whether you feel HVCC has personally impacted your business. I want to have real-life experiences to share with the committee to bring to light…or de-mystify…the here say of whether HVCC has brought quality up, helped or hurt the economics of real estate sales…or maybe there has been no impact at all. Please direct your comments to me at amy@amyswaney.com. This is your chance to say how you feel and have someone listen!

Don’t Miss Real “Estate from A-Z” on KFNN 1510 TOMORROW…SATURDAY, APRIL 10 at 9:00am with Bill Ashker and Roger Nelson

Want to hear the latest about HAMP, HAFA, RESPA, FHA and other lending topics? Please tune in to hear my interview with Bill and Roger. It should be informative, entertaining and a whole lot of fun! I promise…I won’t tell any of my jokes!

Ok, a blonde walks into a building and goes up to a lady and says "Can I have a cheeseburger, fries and a shake?"

The lady looks at her dumbfounded and says

"Miss, this is a library."

So the blonde moves closer and whispers,

"Can I have a cheeseburger, fries and a shake?"

I want to be the lender of choice for your customers so if I can be of assistance to you or your clients, please feel free to contact me at amy@amyswaney.com.